The U.S. labor market is showing signs of softening as both the demand for and supply of workers have diminished, according to recent data. Initial claims for state unemployment benefits dropped by 33,000 to a seasonally adjusted 231,000 for the week ending September 13, partially reversing a surge from the previous week. However, the hiring side of the market has nearly stalled, with payrolls increasing by only 22,000 jobs in August and averaging 29,000 positions per month over the last three months. The unemployment rate is nearing a four-year high of 4.3%, and the average duration of joblessness has risen to 24.5 weeks, the longest since April 2022. Economists attribute the slowdown in hiring to uncertainty caused by import tariffs and a reduction in labor supply due to stricter immigration policies. Federal Reserve Chair Jerome Powell described the situation as a ‘curious balance,’ where both supply and demand have sharply declined. In response, the Fed cut its benchmark interest rate by a quarter-percentage-point to a 4.00%-4.25% range and projected further reductions for the rest of 2025 to support the labor market. Despite low layoffs, those who lose their jobs are facing prolonged unemployment due to the sluggish pace of hiring.